No depreciation allowable on BSE membership card post corporatization of BSE

ITO Vs Sino Securities Pvt. Ltd. (ITAT Mumbai) – After hearing both the parties, we find that the issue is covered against the Revenue and in favour of the assessee by the decision of Mumbai “C” Bench of the Tribunal in ITA no.5538/Mum./2009, for assessment year 2006- 07, in ACIT v/s M/s. Omniscient Securities P. Ltd., order dated 16^th March 2011, wherein the Tribunal, vide Para-10, dismissed the ground raised by the Revenue, which reads as follows:-

“10. We have considered the rival submissions. We find that the entire case of the AO is on the premise that in the event of sale of the shares which the assessee acquired on Corporatization and demutualization of BSE as a Company, the assessee would take the benefit of the provisions of section 55(2)(ab) of the Act and claim the cost of acquisition at the price at which the assessee originally paid for acquiring BSE Card ignoring the depreciation on the BSE Card which the assessee availed from the period of acquisition of the BSE Card till exchange of shares for the BSE Card. This apprehension of the AO which has been the basis of protective assessment made in the order of assessment is erroneous because the assessee has sold 6386 shares of BSE Ltd. out of 10000 shares of BEE Ltd., which it had got on Corporatization and demutualization of the BSE as a limited company, in the assessment year 2008-09. While computing capital gain on such transfer the assessee calculated its cost of acquisition on the basis of the written down value and Re. 1 which had paid per share at the time of issue of shares by BSE Ltd. Thus the grievance of the revenue as projected by the AO is found to be non-existent in this case. With regard to the remaining shares of BSE Ltd. which the assessee holds the question of computation of capital gain would continue to be the same basis on which the assessee has computed capital gain in A. Y 2008-9. In view of the above we are of the view that the CIT(A) was justified in deleting the addition made by the AO. The order of the CIT(A) does not call for any interference. Consequently ground No.1 raised by the revenue is dismissed.”

Keeping the aforesaid findings of the Tribunal in view, we dismiss the grounds raised by the Revenue.
IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI
Sino Securities Pvt. Ltd. V/s. Income Tax Officer